five reasons Minnesota became “the state of fraud”

Governors want to be ranked number one in the nation for all kinds of reasons. Fraud is not one of them. Minnesota now leads the nation in fraud, and that stone-cold truth ended the political career of a governor who just two short years ago was looked to as a savior for his party. Fraud has bubbled up as a flashpoint in the upcoming election, but it did not just appear. During the last decade, a growing Minnesota fraud crisis was created by policymakers and their enablers with both malicious and virtuous intentions.

Unsurprisingly, this story starts and ends with the money.  Too many pipelines of money, too little verification, and a political culture that treated spending as proof of virtue and skepticism as a civil-rights violation.

This summer, American Experiment traveled the state to share some of the nation-leading work Policy Fellow Bill Glahn has done over the past five years to expose fraud in Minnesota as well as hear from Minnesotans. We got an earful…and then some.

American Experiment is now digging deeper into the state of fraud in our public health care programs. Specifically, we will be detailing how our Medicaid dollars are being used as a primary source of fraud at an industrial scale. To kick that off, here are five causes of a perfect storm for fraudsters in Minnesota.

1. Too many buckets, too many spigots, no shut off valve

Minnesota’s health-and-welfare architecture is a maze of overlapping funds: the provider “sick tax,” the Health Care Access Fund, reinsurance for the individual market, Affordable Care Act subsidies, and Medicaid expansion dollars that nearly doubled total Medical Assistance spending from $12.3 billion in FY 2019 to a projected $24 billion in FY 2026. The sick tax (which Governor Dayton eliminated and Governor Walz resurrected) funds the Health Care Access Fund which is a convenient piggy bank kept off the books from the traditional general fund (the one used to track state deficits and surpluses). This tempting fund has been used as a source of general fund money when things get tight, and a place to keep money parked in better times. Together they create an irresistible temptation for both republicans and democrats in St. Paul to fund things they can’t afford while hiding that spending to make things look rosier than they are. This unusual funding mechanism also created confusing and muddy Health care spending budgets that can easily hide aberrations.

Willie Sutton robbed banks because that is where the money was. Minnesota’s crooks hit Medicaid and nutrition programs for the same reason. The state wanted to load as many people on the programs as possible. When keeping them enrolled became the highest priority, billions of new dollars flowed to crooks through fraud and down the drain through sloppiness.

2. Confusing spending with effectiveness

Governor Tim Walz has treated budget overruns as evidence of success. On the state’s universal school-meals program—originally projected near $400 million in its first two years and now running about 46 percent over the three-year forecast—Walz called the extra cost “a wonderful problem to have” because it showed the program was “an investment.” That is the same theory that let Housing Stabilization Services explode from a few million dollars to more than $100 million, and autism and related Medicaid lines grow so fast federal prosecutors later labeled 14 programs high-risk programs and cut off the spigots in Washington DC. An exploding line item on a budget in any mom-and-pop business will alert the owners to a big problem. In Minnesota, it is treated as a “wonderful problem.”

3. Letting the fraudsters hide behind protected constituencies

Feeding Our Future and related schemes were not abstract policy failures. Federal prosecutors charged scores of defendants—overwhelmingly from Minnesota’s Somali community—in nutrition, housing-stabilization, and autism billing cases. State officials had authority to freeze payments. They hesitated after a nonprofit sued, alleging racial discrimination, and after legislators pressed agencies to restore funding. The US House Oversight Committee later found that fear of litigation and discrimination accusations—not a court order—kept the money flowing.  Political clout became a shield.

4. Whistleblowers were intimidated

Scott Stillman, a former DHS digital-forensics supervisor, warned colleagues as early as 2015–2017 that empty day cares were improperly billing and spending and that controls were collapsing. He testified to the Legislature and then he lost his career after feeling the heat from his superiors who accused him of unfairly investigating Somali vendors. Years later, federal prosecutor Joe Thompson described “staggering, industrial-scale fraud” across the same family of programs and estimated that as much as half of $18 billion spent on 14 high-risk Medicaid services since 2018 may have been stolen. Rep. Kristin Robins, Chair of the House Fraud and Agency Oversight Committee found evidence of systemic intimidation to keep employees from saying something when they saw something.

5. Media complicity

For years the story was framed as isolated pandemic program abuse to hide the scope and source of the problem. National and congressional investigators eventually forced the issue. Local coverage later documented that officials treated fraud warnings as an “open secret” and still failed to act. By then CMS was deferring Minnesota Medicaid payments over fraud vulnerabilities as DR. OZ withheld another $91 million. Hundreds of millions in child-nutrition funds were already gone, and billions more in Medicaid billing sat under a cloud.

The Walz administration kept its head in the sand while the rest of the country watched in amazement. A free press that treats program integrity secondary to a political narrative is not a watchdog, it is an accessory after the fact. Minnesota journalists not only looked the other way, they engaged in the same virtue signaling and kowtowing the fraudsters themselves used to perpetrate the very crimes they refused to cover. Even as national media outlets blasted Minnesota for being chumps for the crooks, the largest newspaper in the state must have pulled a muscle in trying to make the argument that the fraud could not possibly reach $9 billion. Yesterday, Minnesota Public Radio scratched its head and (without irony) asked “What’s the deal with fraud in Minnesota?”

More to come….

For Additional resources on this:

1. Matt Dean, “Who Paid the $9 Billion Fraud Bill in Minnesota? Mostly the Federal Government, but Less So Now,” Center of the American Experiment, August 18, 2026, https://www.americanexperiment.org/who-paid-the-9-billion-fraud-bill-in-minnesota-mostly-the-federal-government-but-less-so-now/.
2. Matt Dean, “When They Say It’s Not About the Fraud, It’s About the Fraud,” Center of the American Experiment, July 24, 2026, https://www.americanexperiment.org/when-they-say-its-not-about-the-fraud-its-about-the-fraud-walz-denies-reality-as-cms-stops-paying-minnesotas-sketchy-invoices-first/.
3. Matt Dean, “Was Walz Just Looking the Other Way? Comer Report Foreshadows the Next Shoe to Drop in Vance Probe,” Center of the American Experiment, June 11, 2026, https://www.americanexperiment.org/was-walz-just-looking-the-other-way-comer-report-foreshadows-the-next-shoe-to-drop-in-vance-probe/.
4. Matt Dean, “They Let Billions Get Stolen from Medicaid. Your Health Insurance Just Got More Expensive,” Center of the American Experiment, June 24, 2026, https://www.americanexperiment.org/they-let-billions-get-stolen-from-medicaid-your-health-insurance-just-got-more-expensive/.
5. Matt Dean, “Minnesota’s Overreliance on Shaky Financing Schemes Threatens HCMC amid CMS Crackdown,” Center of the American Experiment, May 27, 2026, https://www.americanexperiment.org/minnesotas-overreliance-on-shaky-financing-schemes-threatens-hcmc-amid-cms-crackdown/.
6. Matt Dean, “To Save Medicare, Congress Must Cut Fraud,” Center of the American Experiment, September 4, 2026, https://www.americanexperiment.org/to-save-medicare-congress-must-cut-fraud/.
7. Matt Dean, “One in Three Minnesota Kids on Medicaid: Why Are We Paying for Middle-Class Medicaid, and How Much Goes to Fraud?” Center of the American Experiment, July 15, 2026, https://www.americanexperiment.org/one-in-three-minnesota-kids-on-medicaid-why-are-we-paying-for-middle-class-medicaid-and-how-much-goes-to-fraud/.
8. Matt Dean, “Kickbacks for Cash: Minnesota’s Autism Program Betrayed Vulnerable Children and Taxpayers,” Center of the American Experiment, March 18, 2026, https://www.americanexperiment.org/kickbacks-for-cash-minnesotas-autism-program-betrayed-vulnerable-children-and-taxpayers/.
9. Matt Dean, “Minnesota’s EIDBI Autism Program: Explosive Growth, Widespread Fraud, and a Coming Reckoning,” Center of the American Experiment, March 13, 2026, https://www.americanexperiment.org/minnesotas-eidbi-autism-program-explosive-growth-widespread-fraud-and-a-coming-reckoning/.
10. Matt Dean, “Guidance on MinnesotaCare for Undocumented Immigrants Shows Why Fraud Is Out of Control,” Center of the American Experiment, December 17, 2025, https://www.americanexperiment.org/guidance-on-minnesotacare-for-undocumented-immigrants-shows-why-fraud-is-out-of-control/.
11. Matt Dean, “Minnesota Crooks Hit Medicaid for the Same Reason Willie Sutton Robbed Banks,” Center of the American Experiment, December 19, 2025, https://www.americanexperiment.org/minnesota-crooks-hit-medicaid-for-the-same-reason-willie-sutton-robbed-banks/.
12. Matt Dean, “Pervasive Medicaid Fraud Met with Milquetoast Response by Walz Regulators,” Center of the American Experiment, July 9, 2025, https://www.americanexperiment.org/pervasive-medicaid-fraud-met-with-milquetoast-response-by-walz-regulators/.
13. Matt Dean, “Minnesota’s ‘Sick Tax’ Would Go Up 11% under DFL Budget,” Center of the American Experiment, April 16, 2025, https://www.americanexperiment.org/minnesotas-sick-tax-would-go-up-11-under-dfl-budget/.
14. Matt Dean, “DR. OZ Withholds Another $91 Million in Minnesota Medicaid Payments That ‘Don’t Look Right,’” Center of the American Experiment, May 1, 2026, https://www.americanexperiment.org/dr-oz-withholds-another-91-million-in-minnesota-medicaid-payments-that-dont-look-right/.
15. Matt Dean, “Medicaid Run Amok,” Thinking Minnesota (Center of the American Experiment), Summer 2026, https://www.americanexperiment.org/magazine/article/medicaid-run-amok/.
16. U.S. House Committee on Oversight and Government Reform, The Cost of Doing Nothing: How Tim Walz and Keith Ellison Fueled Minnesota’s Fraud Explosion (staff report, June 8, 2026), https://oversight.house.gov/report/the-cost-of-doing-nothing-how-tim-walz-and-keith-ellison-fueled-minnesotas-fraud-explosion-2/.
17. Associated Press / Pioneer Press, “‘Industrial-Scale’ MN Fraud May Have Cost Billions, Feds Say,” December 18, 2025 (Joe Thompson’s $9 billion estimate), https://www.twincities.com/2025/12/18/industrial-scale-fraud-may-have-cost-mn-billions-feds-say-while-announcing-new-charges/.
18. CBS News, “Everything We Know about Minnesota’s Massive Fraud Schemes,” updated March 20, 2026, https://www.cbsnews.com/news/minnesota-fraud-schemes-what-we-know/.
19. Ellen Galles, “Free School Meals Cost Rises as Minnesota Serves 450 Million Meals to Students in 3 Years,” KSTP, September 8, 2026 (Walz: “what a wonderful problem to have”), https://kstp.com/uncategorized/free-school-meals-cost-rises-as-minnesota-serves-450-million-meals-to-students-in-3-years/.
20. John Phelan, “DFL Trifecta’s ‘Free’ School Meal Program Is 46% over Budget,” Center of the American Experiment, September 9, 2026, https://www.americanexperiment.org/dfl-trifectas-free-school-meal-program-is-46-over-budget/.
21. Rich McHugh, “Minnesota Whistleblower Speaks Out after Being Targeted for Fraud Findings,” NewsNation, March 30, 2026 (Scott Stillman), https://www.newsnationnow.com/vargasreports/minnesota-whistleblower-alleged-fraud-findings-targeted/.
22. Ryan Faircloth, “Inside Gov. Tim Walz’s Fraud Response,” Minnesota Star Tribune, September 13, 2026, https://www.startribune.com/mn-gov-tim-walz-fraud-feeding-our-future-medicaid-federal-money/601878851; Faircloth, “Four Takeaways from Our Deep Dive into the Walz Administration’s Fraud Response,” Minnesota Star Tribune, September 14, 2026, https://www.startribune.com/mn-gov-tim-walz-fraud-testimony-takeaways-feeding-our-future/601888010.
23. Ernesto Londoño, “How Fraud Swamped Minnesota’s Social Services System on Tim Walz’s Watch,” New York Times, November 29, 2025, https://www.nytimes.com/2025/11/29/us/fraud-minnesota-somali.html; Londoño, “Prosecutors Say Minnesota’s Fraud Scandal Goes Further Than Previously Known,” New York Times, December 18, 2025, https://www.nytimes.com/2025/12/18/us/minnesota-fraud-scandal.html.